BMW Stock Dips On FY20 Profit, Volume Warning Amid Covid-19

Shares of BMW AG (BMW.L,BAMXF.PK,BAMXY.PK) were losing around 6 percent in the German trading on Wednesday after the luxury carmaker said it expects significantly lower Group profit before tax in fiscal 2020, due to the global spread of coronavirus or Covid-19. The company also projects negative impact on delivery volumes in all major markets. BMW further said it plans to invest over 30 billion euros up to 2025 in research and development of future-oriented technologies.

Citing the coronavirus and the required containment measures, the company said it is adjusting production volumes at an early stage in its response to the foreseeable development in demand.

Manfred Schoch, General Works Council Chairman, said the Council has agreed three important tools to navigate the staff safely through the corona crisis. These include flexible BMW working time accounts, the option of working from home, and the latest company regulation on short-time work.

Regarding its outlook for the financial year 2020, BMW said it is difficult to provide an accurate forecast due to the current uncertainty. However, high priority will be given to profitability and free cash flow.

In 2020, Automotive segment’s worldwide deliveries are now expected to be significantly below the previous year’s level. This would also have a negative impact on Automotive segment earnings, particularly in the first half of 2020.

The segment’s EBIT margin would lie within a range of between 2 and 4 percent. The margin would reflect around 4 percentage point negative effect due to the Covid-19 impact.

Further, deliveries by the Motorcycles segment in 2020 are forecast to show a slight decrease, with an EBIT margin within the range of between 6 and 8 percent.

In the year 2019, profit before tax was 7.12 billion euros, 26.1 percent lower than last year, as positive valuation effects recorded in 2018 were not repeated. Group revenues exceeded the 100 billion euro mark for the first time, reaching 104.21 billion euros, up 7.6 percent from the prior year. Deliveries increased 2.2 percent to 2.54 million units.

Automotive Segment’s full-year 2019 EBIT was 4.50 billion euros, down 27.2 percent, and EBIT margin was 4.9 percent, down from 7.2 percent last year. Adjusted EBIT margin was 6.4 percent.

Further, BMW said its Board of Management and the Supervisory Board will propose at the Annual General Meeting on May 14 payment of a dividend of 2.50 euros per share of common stock and 2.52 euros per share of preferred stock.

In Germany, BMW shares were trading at 37.92 euros, down 6.02 percent.

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